TPP would expand
global trade by eliminating roughly 18,000 tariffs that member countries
have imposed on imports from the United States, lifting millions of people out
of poverty around the world. By removing these trade barriers and others
imposed by the United States, TPP would allow consumers and entrepreneurs in all member countries to enjoy more economic activity and lower prices than what the status quo offers.

From an
intellectual property perspective, TPP would establish strong protections of IP
rights in member countries, allowing artists and entrepreneurs around the globe to earn a return
on their creative works and the labor that makes them possible. U.S leadership regarding strong IP rights protections will incentivize more investment, innovation, and economic growth at home and abroad.

Wednesday, June 22, 2016

On June 1, 2016,
the Mercatus Center at George Mason University released its 2016 edition of “Ranking the States
by Fiscal Condition,” which analyzes each U.S. state’s financial
health based on short- and long-term debt and other key fiscal obligations,
such as unfunded pen­sions and healthcare benefits.

Despite recent news that Maryland received positive
bond ratings, the state nevertheless ranks 41st
(out of 51 including Puerto Rico) in overall fiscal solvency in the new
Mercatus Center study, falling four spots from 37th in 2015. In the
study, fiscal solvency breaks down into five categories:

Cash
solvency. Does Maryland have enough cash on hand to cover its short-term bills?
Compared to other states, Maryland is cash insolvent, ranking 43rd
out of 51 and falling four spots from 39th in 2015.

Budget
solvency. Can Maryland cover its fiscal year spending with current revenues?
No, Maryland revenues cover 98% of expenses. This ranks Maryland 46th
in the country as opposed to 44th in 2015.

Long-run
solvency. Can Maryland meet its long-term spending commitments and will there
be enough money to cushion it from economic shocks or other long-term fiscal
risks? No, Maryland’s net asset ratio is -0.19 and for the second year in a row
Maryland ranks 43rd in long-run solvency.

Service-level
solvency. How much “fiscal slack” does Maryland have to increase spending if
citizens demand more services? Maryland ranks in the top half of U.S. states at
16. But this is not an improvement from 2015 when Maryland was ranked 11th.

Trust-fund
solvency. How much debt does Maryland have and how large are its unfunded
pension and healthcare liabilities? Fortunately, Maryland ranks 18th,
which is only a slight decrease from 2015 when it was ranked 17th.

Notably,
Maryland’s unfunded pension liability is below the national average and its
funded ratio is 100%. This means the value of the state’s assets are greater
than the value of the state’s pension obligations. In fact, commendably, Maryland
is the only state with a funded ratio of 100%. The national average is 74%.

But
when it comes to state spending more generally, Maryland’s total primary debt
per capita is $2,880, while the national average is only $2,144. Maryland’s
ratio of debt to state personal income is below the national average of 6.0% at
5.3%. In other words, Maryland does not have a revenue problem; it has a
spending problem!

A short-term plan
for fixing Maryland’s fiscal health should go hand-in-hand with Governor Hogan’s
reformist goals when he first took office. By reducing tax and regulatory
burdens, as FSF President Randolph May and I discussed in a January 2016 Perspectives from FSF Scholars, Maryland will
attract more economic activity that has been migrating over
state lines
for years. Creating an economy of “permissionless innovation” will incentivize
entrepreneurs to open up shop in Maryland. This is the path to improving
Maryland’s fiscal scorecard.

·China alone is estimated
to be the source for more than 70% of global physical trade-related
counterfeiting, amounting to more than $285 billion. Physical counterfeiting
accounts for the equivalent of 12.5% of China’s exports of goods and over 1.5%
of its GDP. China and Hong Kong together are estimated as the source for 86% of
global physical counterfeiting, which translates into $396.5 billion worth of
counterfeit goods each year.

·Besides China and Hong
Kong, the remaining countries in the sample account for 85% of world trade but
account for 8.76% of global physical counterfeiting.

·Although data published
by customs authorities is lacking, the value of counterfeit goods seized and
reported by customs authorities today from the sample of 38 countries ($5.2
billion) represents slightly less than 2.5% of the global measure of physical
counterfeiting of $461 billion.

Counterfeiting of
products poses direct health and safety threats to consumers and also decreases
innovation and economic activity because entrepreneurs have little incentive to
create and develop goods in countries with weak IP rights protections. In 2013,
physical counterfeiting cost consumers and entrepreneurs $461 billion in
economic activity.

It is important that
countries with weak IP rights protections, such as China and India, quickly
strengthen their IP rights protections to discourage this illegal activity. Together,
GIPC’s counterfeiting study and International IP Index are useful tools in
helping policymakers around the world understand how their nations’ IP systems
can be improved.

Strong IP rights protections promote

creativity, innovation, and investment by artists and entrepreneurs. Consumers, ultimately, are the beneficiaries such creativity, innovation, and investment. The GIPC's new study, "Measuring the Magnitude of Global Counterfeiting," is a valuable resource that reinforces the need to fight counterfeiting."

Global Internet traffic will increase nearly threefold over the next
five years and will have increased nearly 100-fold from 2005 to 2020.

Smartphone traffic will exceed PC traffic by 2020.
In 2015, PCs accounted for 53 percent of total Internet traffic, but by 2020
PCs will account for only 29 percent of traffic. Smartphones will account for
30 percent of total Internet traffic in 2020, up from 8 percent in 2015.

Traffic from wireless and mobile
devices will comprise two-thirds of total Internet traffic by 2020.

Global Internet traffic in 2020 will be equivalent
to 95 times the volume of the entire global Internet in 2005.

The number of devices connected to broadband
networks will be three times as high as the global population in 2020. There will be
3.4 networked devices per capita by 2020, up from 2.2 networked devices per
capita in 2015

The
proliferation of video applications is by far the biggest driving force behind
the increases in Internet traffic over the past several years and will continue
to be for the next five years as connections increase and networks expand. On a
global level, video traffic is projected to comprise 79 percent of Internet traffic
in 2020. This is an increase of 16 percentage points from 2015 (63 percent).

While the United
States certainly has been a leader in the amount of growth in connections and traffic,
Cisco projects the rest of the world will have tremendous growth over the next
five years. For the U.S. to continue to lead with respect to broadband
deployment and innovation in broadband technologies, it is important that the
FCC and state and local agencies remove unnecessary
and burdensome regulatory barriers that stifle investment and innovation in
broadband networks. Additionally, for continued growth in mobile broadband innovation,
the FCC needs to allocate more licensed and unlicensed spectrum to meet the increasing
consumer demand for advanced services and devices.

On June 9, 2016, the Trustworthy Accountability Group (TAG) announced that advertising agencies Interpublic and Omnicom as well as Google, Go Daddy, and Bayer Consumer Health have joined its voluntary initiative that is aimed at preventing ad placement on websites which facilitate the distribution of pirated content and/or the illegal dissemination of counterfeit goods. (See this February 2015 blog for more on TAG.)The addition of these companies and advertising agencies to TAG’s ongoing initiative should be helpful in reducing the $2.4 billion that legitimate content creators and entrepreneurs lose to pirated websites each year. In 2014, ad-supported piracy generated $204 million in aggregate revenue according the Digital Citizen’s Alliance. Without the use of Google’s search engine facilitating as much distribution of illegal content, piracy loss should be meaningfully reduced. Google’s support, if implemented properly, should mean YouTube users will not be able to generate ad-supported revenue from pirated content.It is necessary to address, and diminish, piracy and content theft through voluntary initiatives like TAG's that help ensure that content creators, artists, innovators, and marketers can earn a return on their creative works!

Tuesday, June 14, 2016

Whenever the FCC
proposes to spend Universal Service money, it is important to remember that the
subsidies come out of consumers' pockets. In 2015 alone, USF spending totaled
$8.35 billion dollars. The Commission has an obligation to consumers to ensure
that USF money is spent wisely. Dollars collected from consumers should not be
wasted or risked on untried bureaucratic pet projects.

FSF President Randolph May and I have previously raised concerns about the way the FCC's
"rural broadband experiments" are run – including funding rural
electric co-ops' and other entities' entry into the broadband business to the
tune of $40 million dollars. It's not the FCC's job to artificially create and
prop up new business competitors through subsidies. And capitalizing entities
with no established operations or experience in the competitive broadband
market risks wasting USF dollars collected from consumers.

At the very least,
"Strong Safeguards of Scarce
Funds Should Govern FCC Broadband Experiments." In a prior blog post, I urged the FCC to
maintain its bank-issued letters of credit (LOC) requirements before
distributing rural broadband experiment money. Requiring recipients to obtain
LOCs from banks helps ensure that disbursed dollars will be returned if
recipients fail to meet build-out and service obligations.

According to reports in Telecompetitor, some
entities remain unable to obtain LOCs and therefore have not received rural
broadband experiment money. This inability comes despite the fact that orders
issued by the Commission this spring have loosened LOC requirements.

In other words, it
looks like some proposed rural broadband experiments are delayed or won't
happen because those would-be recipients of USF money still can't get banks to
give them LOCs. But this shows the sensibility of requiring LOCs, not of
relaxing the standards. If financial institutions in the business of lending
money won't risk giving LOCs to entities participating in rural broadband
experiments, why should we want money collected from consumers to be thrown
at such risky ventures?

In and of themselves,
these rural broadband experiments are problematic on FCC institutional and
financial responsibility grounds. But the Commission may not be able to undo
what's already been done.

Going forward, however,
the Commission ought to retain its Letter of Credit protections. To loosen them
further will risk dissipating funds collected from consumers to fund an already
excessive USF tax.

Wednesday, June 08, 2016

Today, Senator Ted
Cruz and Representative Sean Duffy introduced the
“Protecting
Internet Freedom Act,” which would prevent the U.S. government from
relinquishing oversight of the Internet domain name system without Congressional
approval.

In 2014, the
National Telecommunications and Information Administration (NTIA) announced
that the Internet Corporation for Assigned Names and Numbers (ICANN), the
organization responsible for the Internet domain name system, would transition
from U.S. oversight to a global multi-stakeholder model. Many critics of the
transition, including
Senator Cruz, have stated that relinquishing oversight to a global
multi-stakeholder model likely will allow repressive foreign governments to impose
Internet censorship.

Not only could the
global multi-stakeholder model violate First Amendment principles by giving
control to repressive foreign governments with a history
of Internet censorship, but the transition violates rule of law norms because
it bypasses Congressional approval. As proposed, the “Protecting Internet Freedom
Act” would prevent the NTIA from furthering this transition, and it would
require Congressional approval for any future decisions regarding oversight of
the Internet domain name system.

It is important
that Congress consider legislation like that introduced by Senator Cruz and Representative
Duffy as soon as possible!